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Case Law Details

Case Name : Kunvarji Fincorp Pvt Ltd Vs DCIT (ITAT  Ahmedabad)
Appeal Number : ITA No. 228/AHD/2020
Date of Judgement/Order : 02/05/2023
Related Assessment Year : 2012-13
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Kunvarji Fincorp Pvt Ltd Vs DCIT (ITAT  Ahmedabad)

ITAT Ahmedabad, in the case of Kunvarji Fincorp Pvt. Ltd. Vs Deputy Commissioner of Income Tax held that denial of Tax Deducted at Source (TDS) credit due to the assessee’s mistake or misunderstanding is impermissible. The case emphasizes the importance of fairness and adherence to the statute when it comes to tax collection.

The crux of the dispute was that Kunvarji Fincorp Pvt. Ltd., a Non-Banking Financial Company (NBFC), failed to claim a refund on the TDS credit while filing its income return. The assessee argued that this omission was inadvertent and sought a rectification, which was rejected by the Computerized Processing Cell (CPC) and subsequently by the Commissioner of Income Tax (Appeals).

However, the tribunal, invoking the Gujarat High Court’s decision in the S.R. Koshti Vs. CIT case, asserted that “Tax can be collected only as provided under the Act” and that any over-assessment due to the assessee’s mistake or misunderstanding needs rectification. The tribunal thereby directed the assessing officer to grant the TDS credit benefit to the assessee.

The decision reiterates the importance of ensuring fair and proper application of tax laws. Tax authorities are required to assist assessees and ensure that only legitimate taxes are collected, regardless of any mistakes or misconceptions by the assessee. This case sets a vital precedent for the consideration of human errors in tax procedures.

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July 2024